The World Bank in Madagascar

Madagascar, the world’s fifth-largest island, lies in the Indian Ocean off the coast of southern Africa. Its population, estimated at 30.3 million in 2023, faces persistently high poverty.

Economy
Growth is projected to reach 4% in 2025, supported by investment, construction, and tourism. Agriculture output is expected to decline following a below-average rice harvest caused by insufficient rainfall. Inflation remained above 8% year-on-year (y/y) throughout the first half of 2025, mainly due to higher food and import prices. The current account deficit widened in the first half of 2025 as a result of a larger trade deficit and higher dividend payments. Exports of vanilla, cloves, and mining products contracted due to a supply glut and weak global demand, while textile exports continued to grow despite external headwinds such as high tariffs. Meanwhile, most imports increased across the board (equipment, food, and inputs).

Growth is projected to average 4.2% over 2026-27, driven by public investment in infrastructure and private investment in mining, tourism, and telecommunication. Inflation is expected to stay elevated throughout 2025, before gradually easing thanks to declining oil prices and improved rice production. Over the medium term, the fiscal deficit is projected to remain at around 4% of GDP as public investments pick up. The public debt stock is expected to remain below 55% of GDP, with the risk of debt distress remaining moderate.

Last Updated: Oct 06, 2025

Madagascar continues to face deep structural challenges that hinder its development. Growth remains limited by the predominance of low-productivity sectors such as subsistence agriculture, along with weak infrastructure, recurrent natural disasters (cyclones, droughts), limited access to basic services, and rising climate vulnerability, leaving it insufficient to generate the jobs needed to absorb a rapidly growing population. Human capital accumulation is also low, with a Human Capital Index of 0.39, among the lowest globally. 

Extreme poverty rate, measured at the $3/day threshold (PPP 2021), rose from 67.3% in 2012 to 69.2% in 2021, placing the country among the poorest globally. Rural poverty remains a serious challenge, and urban areas have experienced a significant deterioration in living standards over the past decade. While inequality declined slightly, from a Gini coefficient of 38.2 in 2012 to 36.8 in 2022, this was driven largely by rising urban poverty rather than broad-based welfare gains.

Boosting resilient growth will require bold reforms to improve governance, build resilience to shocks including climate risks, expand access to basic infrastructure, notably energy, transport, and digital infrastructure. Breaking the cycle of poverty further calls for urgent reforms to create better-paying jobs by raising agricultural productivity, strengthening market linkages, and enhancing competition in key export value chains while simultaneously investing in human capital.

Last Updated: Oct 06, 2025

The Country Partnership Framework (CPF) for Madagascar for 2023 to 2027 sets out the strategy to support Madagascar’s efforts towards inclusive and resilient growth. It focuses on expanding job opportunities, improving equity in public services, and strengthening resilience to shocks. Underpinned by the Systematic Country Diagnostic (SCD) and the Country Private Sector Diagnostic (CPSD), this CPF also reflects consultations with the government, development partners, the private sector, civil society, and academia.

As of February 2025, the World Bank portfolio in Madagascar totaled $3.5 billion, comprising 17 national projects and 5 regional operations. Infrastructure accounts for the largest share at 43% ($1.5 billion), followed by sustainable development at 25% ($875 million), human development at 20% ($703 million), and equitable growth, finance, and institutions at 12% ($405 million). In addition to financing, the World Bank provides analytical and advisory support to strengthen evidence-based decision-making and implementation of development. Notably, the Madagascar component of the Southern African Development Community Regional Statistics is helping close data gaps and build national capacity for data-driven decision-making.

Last Updated: Oct 06, 2025

The World Bank is expanding energy access in Madagascar through strategic investments. The LEAD project connected 200,000 households, financed 1,500 km of lines, and electrified 500 rural health centers. The Off-Grid Market Development Fund (OMDF), established to support private sector deployment, funded 303,000 new connections, benefiting 1.5 million people. Building on this progress, the Digital and Energy Connectivity for Inclusion Project is scaling up private sector-led energy access.

The Madagascar National Water Project is addressing critical water shortages in Antananarivo and key towns through urgent infrastructure upgrades. In Antananarivo, repairs at the Mandroseza treatment plant and new structural works will boost water supply by 50,000 m³/day by early 2026, reaching 100,000 m³/day by project completion in 2027. In the Deep South, a transformative reservoir is underway to irrigate 16,000 hectares, supply drinking water to 500,000 people, and generate 11.5 GWh/year of clean energy, with preparatory works already in progress.

The World Bank’s Integrated Growth Poles Projects have catalyzed private sector development, mobilized $80 million in investment and created 40,000 formal jobs. Over 800 SMEs received support, and 40,000 producers improved their productivity and market access in key value chains, boosting smallholder incomes by 35%. The current phase under the Economic Transformation for Inclusive Growth Project continues this momentum across nine regions.

The Connectivity for Rural Livelihood Improvement Project improved access for 300,000 rural residents by upgrading RN 44 and RN 12A, including a 220-meter bridge to the strategic port of Fort-Dauphin. The Connecting for Inclusive Growth Project, that received additional financing in 2025, supports bridge construction in cyclone-prone areas. The Manambery Bridge, completed in September 2025, ensures year-round access and rapid emergency response.

Partners

The World Bank works closely with the following partners in Madagascar: the African Development Bank, Agence Française de Développement (AFD), the Food and Agriculture Organization (FAO), UNICEF, UNOPS, UNDP, World Food Programme, the International Potato Centre, AfricaRice, International Livestock Research Institute, International Crops Research Institute for the Semi-Arid Tropics, United States Agency for International Development (USAID), the World Health Organization, the GAVI Alliance, Power of Nutrition, the German International Cooperation Agency (GIZ), Japan’s International Cooperation Agency (JICA), Catholic Relief Services (CRS), Fondation Tany Meva and the European Union.

Last Updated: Oct 06, 2025